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on Labor Markets - Supply, Demand, and Wages |
| By: | Storm, Eduard (Institute for Advanced Studies (IHS) and RWI – Leibniz Institute for Economic Research); Gonschor, Myrielle (Kienbaum Consultants); Schmidt, Marc Justin (TU Dortmund, RTG 2484) |
| Abstract: | We study how artificial intelligence (AI) affects workers’ earnings and employment stability, combining German job vacancy data with administrative records from 2017–2023. Identification comes from changes in workers’ exposure to local AI skill demand over time, instrumented with national demand trends. We find no meaningful displacement or productivity effects on average, but notable skill heterogeneity: expert workers with deep domain knowledge gain while non-experts often lose, with returns shaped by occupational task structures. We also document AI-driven reinstatement effects toward analytic and interactive tasks that raise earnings. Overall, our results imply distributional concerns but also job-augmenting potential of early AI technologies. |
| Keywords: | AI, Online Job Vacancies, Skill Demand, Worker-level Analysis, Employment, Earnings, Expertise |
| JEL: | D22 J23 J24 J31 O33 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ihs:ihswps:number61 |
| By: | David Arnold; Simon Quach; Bledi Taska |
| Abstract: | This paper studies the labor market effects of recent state-level policies that require employers to disclose salary information in job postings. Leveraging a difference-in-differences design, we show that employers increased the fraction of postings with salary information by 30 percentage points. Across three datasets, we find consistent evidence of an increase in wages of 1.3-3.6%. We find no impacts on pay dispersion, employment, the number of postings, or skill and education requirements. Our evidence is consistent with pay transparency increasing competition in the labor market, leading to positive spillovers on incumbent workers and always-posting firms. |
| JEL: | J30 J31 J38 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34480 |
| By: | Hellsten, Mark (University of Tübingen); Khanna, Shantanu (Northeastern University); Lodefalk, Magnus (Örebro University); Yakymovych, Yaroslav (Uppsala University) |
| Abstract: | Artificial intelligence (AI) is expected to reshape labor markets, yet causal evidence remains scarce. We exploit a novel Swedish subsidy program that encouraged small and mid-sized firms to adopt AI. Using a synthetic difference-in-differences design comparing awarded and non-awarded firms, we find that AI subsidies led to a sustained increase in job postings over five years, but with no statistically detectable change in employment. This pattern reflects hiring signals concentrated in AI occupations and white-collar roles. Our findings align with task-based models of automation, in which AI adoption reconfigures work and spurs demand for new skills, but hiring frictions and the need for complementary investments delay workforce expansion. |
| Keywords: | hiring, labor markets, Artificial Intelligence, task content, technological change |
| JEL: | J23 J24 O33 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18267 |
| By: | Andrés Erosa; Luisa Fuster; Gueorgui Kambourov; Richard Rogerson |
| Abstract: | Two robust empirical facts are that mean wages and cross-sectional wage dispersion both increase over the life cycle. We study how these two changes vary across occupations and document a strong positive correlation: occupations with high mean wage growth over the life cycle also exhibit greater increases in cross-sectional wage dispersion. We develop a novel dynamic Roy model that features both static and dynamic comparative advantage and show that it can account for the variation in life cycle wage distributions across high and low wage occupations. Dynamic comparative advantage reflects individual heterogeneity in occupation specific learning abilities and is the dominant force that shapes occupation choice in our model. We highlight several important implications of dynamic comparative advantage and show that our model captures the data better than a benchmark model that features persistent shocks. |
| JEL: | E24 J24 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34481 |
| By: | Checchi, Daniele (University of Milan); Kreisman, Daniel (Georgia State University); García-Peñalosa, Cecilia (CNRS) |
| Abstract: | We consider the contribution of the intensive margin of labor supply (hours worked above zero) to the gender wage gap across four economies (Germany, France, US, UK) over a long time-horizon. We first build a model in which firms offer two wage contracts – one that pays a fixed wage but allows workers to choose their preferred number of hours up to “full time”, and a second in which wages are relative to imperfectly observable productivity but hours can be limitless. The former includes part- and full-time work, while the latter represents a class of workers who often must supply very long hours but who can then earn potentially unlimited remuneration. We then apply a Oaxaca decomposition for part-, full-, and over-time workers to observe the relative contribution of sorting and remuneration across these hours “regimes” over time and across countries. Through this, we show that while female employment in over-time work increased and the gender wage decreased, this was not driven by increasing selection but rather by a decrease in the unexplained portion of the wage gap over time. We conclude by considering the contribution of unions and labor market flexibility to these cross-country differences. |
| Keywords: | over-time work, gender wage gap, labor supply, Oaxaca decomposition |
| JEL: | J01 J16 J31 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18265 |
| By: | Daniel Fershtman; Kfir Eliaz; Alexander Frug |
| Abstract: | We study optimal dynamic scheduling of workers to tasks when task completion is privately observed —so that workers can delay the release of finished tasks — and idle time is the only available incentive instrument. We characterize a scheduling rule, and its induced equilibrium, that maximizes expected discounted output. Unless workers are inherently slow, production alternates between efficient phases and delays. Our analysis reveals a trade-off between the quality and the size of the workforce. We also present several extensions, illustrating the versatility of the framework. |
| Keywords: | idle time, moral hazard, multi-server systems, non-monetary incentives, optimal scheduling, strategic servers |
| JEL: | D82 J24 C73 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1535 |
| By: | Yongsung Chang; Elin Halvorsen; Marios Karabarbounis |
| Abstract: | We present a new estimate for the elasticity of spousal labor supply in response to changes in the primary worker's income, the so-called "added worker effect." By leveraging firm-side information of the primary worker as an instrument, we isolate income changes that are uncorrelated with the spouse's productivity, addressing endogeneity bias. We find an economically meaningful role for the spousal labor supply, especially among young households with limited financial assets. We construct a heterogeneous agent model consistent with the estimated spousal employment response to design a government transfer program that effectively mitigates the negative income shock. |
| Keywords: | employment and labor markets; household and consumer finance |
| JEL: | E60 H20 J20 |
| Date: | 2025–11–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedrwp:102137 |
| By: | Niklas Engbom; Hannes Malmberg; Tommaso Porzio; Federico Rossi; Todd Schoellman |
| Abstract: | Chandler (1977) shows that large firms require hierarchies of white-collar workers to coordinate complex production. We document that this insight continues to hold globally today, and we show that low education levels in developing countries limit the supply of white-collar workers and constrain firm size. We extend the occupational choice model of Lucas (1978) to allow entrepreneurs to reorganize their firms by allocating administrative tasks to hired professionals, which brings the firm closer to constant returns to scale. We calibrate the model to be consistent with cross-sectional microdata and validate it using quasi-experimental and experimental evidence on the effects of educational expansions and management training interventions. Skills explain two-thirds of the reorganization of production into large firms with economic development, while structural transformation and reductions in barriers are needed to explain the remaining shift. |
| JEL: | E0 O0 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34483 |
| By: | Giovanna D'Adda (University of Milan, Italy and CMCC); Simone Ferro (University of Milan, Italy); Tommaso Frattini (University of Milan, LdA, CEPR, RFBerlin); Alessio Romarri (Departament of Applied Economics, Universitat Autònoma de Barcelona, Spain & RFBerlin, Germany) |
| Abstract: | Using large-scale high-granularity data from a food delivery platform and granular pollution and weather information, we study how PM2.5 fluctuations affect riders' absenteeism, productivity, and accidents. Exploiting exogenous pollution variation from inverse boundary layer height, we find that higher pollution increases absenteeism for all workers and raises delivery times and accident rates only among (e-)bike riders, who must exert physical effort while working. Affected workers compensate productivity losses by working longer hours. Monetary incentives mitigate the effects on absenteeism but do not offset the decline in productivity and appear to exacerbate accident risk. |
| Keywords: | Air Pollution; Food Delivery Riders; Absenteeism; Labor Productivity; Workplace Safety. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:uab:wprdea:wpdea2518 |
| By: | Chelsey Reid (The Treasury) |
| Abstract: | This analytical note is part of a suite of papers by the Treasury to support its strategic advice on policy priorities for lifting human capital. Human capital is defined as the productive wealth embodied in people in the form of the knowledge, skills and abilities that enable them to participate fully in work and society more broadly. The most recent estimates placed the real economic value of New Zealand’s human capital at around $1.9 trillion in 2018, with a real value that grew at around 2.6% per year since 1986. This note examines high-level trends in contributions to human capital in New Zealand over the past two decades. It also presents a decomposition of the aggregate growth of human capital stock since 1986 to understand the contributions that selected components have made over time. Other papers in this series have developed an overall approach to analysing human capital that is suited to the New Zealand context (see Schaer, 2025) and analysed scenarios around the future of New Zealand’s human capital (see Ng, 2025). The analysis highlights key opportunities and challenges to New Zealand’s human capital now and in the future. The availability of human capital will become a key challenge over the long term as the age composition of the population changes. New Zealand is youthful compared to most high-income countries but is expected to undergo major shifts towards a greater proportion of older people as natural birth rates fall and a greater proportion of people age out of the workforce. Fewer entrances into the labour market by younger people relative to the number of people retiring each year is expected to reduce the working age population and may reduce labour force participation over time. Some trends indicate that New Zealand’s human capital is both high and improving. Broad-based employment growth over the past 20 years has been a key source of income growth relative to other OECD countries (Galt, 2023). This has been driven in large part by a greater share of people entering and remaining in the workforce, particularly women, older people, and overseas migrants. Women’s contribution to human capital growth was $135 billion in excess of the national average growth rate between 1986 and 2018, partly reflecting their strong rise in workforce participation. Employment and labour force participation rates have performed well historically, though unpacking the aggregate trends reveals persistent ethnic and gender disparities in the form of chronic underutilisation and lower wages. Migration has made a net positive contribution to population and employment growth since the early 1990s and has become the main driver of population growth as natural birth rates fall. International migrants are on average younger and more likely to hold advanced qualifications compared to New Zealand-born residents. With highly educated New Zealanders emigrating at high rates for employment opportunities overseas, inward migration will play an increasingly important role in meeting the demand for jobs and skills in the labour market, unless wages and other pull factors can become more competitive to improve the retention of skilled labour. High quality education is a long-term investment into people’s human capital. New Zealand has benefitted from rapidly improving skill levels in the adult population over the past two decades, bolstered by more advanced qualifications in the resident population and the migration of educated people. Between 1986 and 2018, bachelor’s degrees contributed an additional $168 billion to the value of human capital over and above the national average growth rate. Postgraduate degrees have contributed an additional $200 billion over the same period. At the aggregate level, a well-educated workforce is a key factor in achieving greater aggregate productivity, innovation and long-term economic growth. At the individual level, increasing knowledge and skills plays a large role in labour market outcomes and higher average lifetime earnings. However, these educational gains have not translated into as high an increase in relative wages in New Zealand compared to other OECD countries. Trends suggest a potential future decline in skill levels. In keeping with international trends, New Zealand’s school level achievement, as measured by the Programme for International Student Assessment (PISA), is declining. Performance in literacy, numeracy and science has dropped to the lowest scores since records began. Additionally, the skill profile of temporary migrants has declined in recent years, owing to a larger share of temporary work visa approvals for migrants in lower skill categories. If these trends continue, a deteriorating skills base in the population will weaken New Zealand’s productive capacity over the medium to longer term. Between 1986 and 2018, New Zealand’s human capital growth was driven by increasing contributions from postgraduates, women and Māori. Contributions specific to women were supported by increases in labour market participation and a growing share of bachelor’s and postgraduate degree attainment. Māori contributions, while still behind non-Māori in overall human capital value, show positive trends driven by a younger workforce, a declining share of unskilled workers, and rising qualification attainment, particularly at the non-degree and mid-skill levels. Overall, the trends point to a mix of opportunities and challenges for New Zealand’s human capital in the future. The structural ageing effect will shrink the growth of the working age population, and with arguably limited scope for further increases in participation and hours worked by older people, mitigation options may fall to some mix of reducing chronic underutilisation, reducing differences in employment and participation gaps, and increasing inward migration. There are opportunities to support wage growth and skill premiums through higher productivity, which could help to retain and attract skilled workers. Lastly, addressing the significant potential productivity losses from declining school level educational attainment will be important to safeguard New Zealand’s human capital over the longer term. |
| JEL: | E24 J24 |
| Date: | 2025–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nztans:an25/08 |
| By: | Jesse Bruhn; Michael Gilraine; Jens Ludwig; Sendhil Mullainathan |
| Abstract: | Much of the data collected in education is effectively thrown away. Students answer individual test questions, but administrators and researchers only see aggregate performance. All the item-level data are lost. Ex ante it is not clear this destroys much useful information, since the aggregate might be a sufficient statistic. Using data from Texas for 5 million students and 1.31 billion student-item responses, we show that in fact aggregation does destroy a great deal of valuable information in education: (1) Even conditional on a summary test measure, there is additional information in the item-level data; (2) This additional information is relevant for the student outcomes that education decisions seek to optimize; and (3) This information can be made practically useful for schools. Given how inexpensive storing, transmitting and analyzing such data would be, large gains could be had in education by simply using all the data we currently collect. |
| JEL: | I20 I21 J24 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34484 |
| By: | Joshua S. Graff Zivin; Anthony Lepinteur; Matthew J. Neidell; Adrian Nieto Castro |
| Abstract: | We provide new evidence that short-run temperature shocks affect unemployment dynamics. Linking daily weather data with three decades of Current Population Survey microdata, we show that cold, but not hot, temperatures significantly increase unemployment risk. This effect is concentrated in climate-exposed industries and driven by both increased job separations and longer unemployment durations. Separations appear to be driven by a rise in layoffs rather than quits, while the increase in unemployment duration is largely explained by a decline in employer vacancy postings. Taken together, temperature-induced joblessness dynamics are primarily demand-driven, rather than a result of changes in worker behavior. |
| JEL: | I1 J2 Q5 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34487 |
| By: | Sumedha Gupta; Johanna Catherine Maclean; Christopher J. Ruhm; Kosali I. Simon |
| Abstract: | The United States lacks a federal paid sick leave policy. However, 18 states and the District of Columbia have adopted or announced paid sick leave employer mandates to increase access to this benefit, creating a quasi-experimental setting to study whether paid sick leave affects healthcare use. People enrolled in Medicaid are an important population to study in terms of state paid sick leave policies as the majority of non-disabled enrollees are employed, but frequently work in jobs without paid sick leave. Given enrollees’ lower incomes, losing earnings to receive healthcare may be a significant barrier to care. In this study, we examine the effect of state paid sick leave policies on Medicaid-financed dispensed prescription medications. Using difference-in-differences methods that are robust to bias associated with a staggered treatment rollout, we show that Medicaid-financed dispensed prescription medications increase by 6.7% following adoption of a state paid sick leave policy. These findings suggest that state paid sick leave policies promote engagement with the healthcare system and use of healthcare services among financially constrained populations. |
| JEL: | H0 I1 K0 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34485 |
| By: | Korpela, Heikki |
| Abstract: | Finland offers a subsidy to employers for hiring individuals with low employment prospects. In 2015, changes to the subsidy’s funding caused some regions to unexpectedly suspend new subsidy grants. I examine wages and employment in these regions using a differences-in-differences setting, with regions where the subsidy remained available serving as control areas. Among the population with low employment prospects, the temporary halt reduced the wage sum from subsidized employment by 37.2 million euros (−32%) over the following year and relative to the control areas. The similarly measured net decline in the total wage sum in this group was 32.7 million euros (−7.3%). Because the reductions in subsidized and total wage sums are very similar, the suspension of new subsidy grants appears to have been largely uncompensated by increases in unsubsidized employment. This suggests that any displacement effects from the subsidy, where the subsidized jobs would be replacing unsubsidized ones, are likely to be small. |
| Keywords: | hiring subsidies, long-term unemployment, J22, J64, J68, fi=Työmarkkinat|sv=Arbetsmarknad|en=Labour markets|, |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:179 |
| By: | Becker, Sascha O (University of Warwick and Monash University); Egger, Hartmut (University of Bayreuth); Koch, Michael (Aarhus University); Muendler, Marc-Andreas (University of California San Diego) |
| Abstract: | This paper links globalization, worker efficiency, and wage inequality within plants to internal labor market organization. Using German plant–worker data and information on the task content of occupations, we document that larger plants (i) use more occupations, (ii) assign fewer tasks per occupation, and (iii) exhibit greater wage dispersion. We develop a model where plants endogenously bundle tasks into occupations, improving worker-task matching at the cost of higher fixed span-of-control costs. Embedding this into a Melitz framework, we show that trade increases worker efficiency and wage inequality in exporting plants, whereas non-exporting plants experience the opposite effects. Structural estimation and simulations confirm the model’s predictions and point to non-monotonic economy-wide effects. |
| Keywords: | Tasks; specialization; international trade; firm-internal labor allocation JEL Classification: F12, F16, J3, L23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:783 |
| By: | Takushi Kurozumi; Yu Sugioka; Willem Van Zandweghe |
| Abstract: | Research in labor economics has documented evidence of labor market monopsony. Nevertheless, macroeconomic studies routinely consider households' wage-setting under monopolistic competition. We introduce firms' wage-setting under monopsonistic competition in an otherwise standard sticky-price model. This substantially alters the implications for wage dynamics, welfare, and policy. Compared to its counterpart model with monopolistic wage-setting, our model indicates that the wage Phillips curve includes the wage markdown as its main driver and has a steeper slope generated by strategic substitutability in wage-setting, and that the second-order approximation to households' utility functions is of the same form but with a smaller welfare weight on wage growth variability. Consequently, a welfare-maximizing policy features stabilizing inflation rather than wage growth. |
| Keywords: | labor market monopsony; wage markdown; strategic substitutability; staggered wage-setting; timeless-perspective policy; inflation stabilization |
| JEL: | E24 E52 J42 |
| Date: | 2025–11–19 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:102125 |
| By: | Dorn, Franziska |
| Abstract: | A comprehensive understanding of economic deprivation requires examining income, the value of unpaid household services, and leisure. These concepts can be understood either through subjective utility or objective indicators such as measurable expenditures and time use, and much depends on how they are theorized. Divergent economic theories lead to different methods for estimating the market value of non-market work, which significantly impacts the definitions of household income and time poverty. Most empirical studies of time and income poverty identify deprivation by measuring shortfalls in unpaid household work once minimum thresholds for leisure and paid work are set. These approaches, however, primarily reflect household budget constraints rather than the combined bundle of time and income needed to sustain a standard of living above poverty. To advance poverty measurement, it is essential to examine time and income jointly and recognize their interdependence, as money can buy time, and time can save money. This paper examines the conceptual challenges involved in integrating time and income into a unified framework, including the evaluation of thresholds, the substitutability between time and income, and the valuation of unpaid work. Addressing these issues clarifies how integrated measures of time and income poverty can more accurately capture the resources required for the development of human capabilities. |
| Keywords: | poverty, time use, gender inequality, living standard, unpaid work, measurement |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifsowp:331893 |
| By: | Patrick M. Kline |
| Abstract: | Economists often rely on estimates of linear fixed effects models developed by other teams of researchers. Assessing the uncertainty in these estimates can be challenging. I propose a form of sample splitting for network data that breaks two-way fixed effects estimates into statistically independent branches, each of which provides an unbiased estimate of the parameters of interest. These branches facilitate uncertainty quantification, moment estimation, and shrinkage. Algorithms are developed for efficiently extracting branches from large datasets. I illustrate these techniques using a benchmark dataset from Veneto, Italy that has been widely used to study firm wage effects. |
| JEL: | C01 J30 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34486 |
| By: | Jillie Chang (Inter-American Development Bank); David K. Evans (Center for Global Development); Carolina Rivas Herrera (New York University) |
| Abstract: | Approximately one in three people in Latin America and the Caribbean live in poverty and one in seven in extreme poverty. This paper provides an overview of who the poor are and how they live, using 18 recent household surveys from the region. It examines (1) how many people are poor, (2) how the poor are distributed geographically, (3) how poverty affects specific groups, (4) how much of the poverty in the region is chronic versus transitory, and (5) how poverty numbers have changed over time. Second, it identifies how the poor live. Specifically, it discusses (6) the living arrangements of the poor, (7) their assets, (8) how they earn their incomes, (9) how they access human capital services, and (10) their access to social safety nets. This descriptive analysis may be useful for targeting efforts and for generating hypotheses for poverty reduction that can be tested causally. |
| Keywords: | poverty, development, Latin America and the Caribbean |
| JEL: | I25 J20 O10 O12 O15 O18 |
| Date: | 2025–10–28 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:wpaper:734 |